Status and change of major issues related to governance

• Status of the largest shareholder’s stake (As of April 1: Disclosure by April 7)
• Change of the largest shareholder’s equity ratio 1% and more of the corporation’s total number
  of issued shares
• Status of executive composition (As of April 1: Disclosure by April 7)
• Executive changes (within 7 days from the registration date as an executive on the certified copy
  of register)
• Status of equity ratio in affiliated companies (As of April 1: Disclosure by April 7)
• Change in the equity ratio in an affiliated company by 1% and more of the corporation’s total
  number of issued shares

Issues causing changes in financial structure

• Decision on the acquisition or disposal of 10% and more of fixed assets out of total assets at the
  end of recent fiscal year (within seven days from the internal decision date)
• Decision on the acquisition or disposal of other corporation’s shares and contribution securities
  equivalent to 5% and more of equity capital (within seven days from the internal decision date)
• Decision on giving or receiving 1% and more of equity capital (within seven days from the
  internal decision date)
• Decision on offering 5% and more of equity capital as security or debt guarantee for others
  (within seven days from the internal decision date)
• Decision on exemption or acquisition or being exempted of debts equivalent to 5% and more of
  equity capital (within seven days from the internal decision date)
• Decision on capital increase or capital reduction (within seven days from the internal decision
  date). Decision on the issuance of CB and BW (within seven days from the internal decision
  date)

Issues causing changes in company’s business activities.

• Decision under Article 374 (Business Transfer, Take Over and Lease), Article 522 (Merger
  Agreement and Resolution on Approval), Article 527.2 (Simple Merger), Article 527.3 (Small
  Scale Merger) and Article 530.2 (Company Division and Partition Merger) of the Commercial Law
  (within seven days from the internal decision date)
• Decision on comprehensive exchange of shares, according to Article 360.2 of the Commercial Law, or decision on share transfer according to Article 360.15 of the Commercial Law, and
  Dissolution cause occurring under Article 517 of the Commercial Law or other laws (within seven
  days from the dissolution cause occurring date)
• Decision on commencement, closure or abolishment of the company reorganization procedure
  under the Company Reorganization Act (within seven days from the date receiving the decision
  notice from the court)
• Decision on commencement or abolishment of composition under the Composition Act, decision
  on the commencement, suspension or release of management procedure under Article 4.4 of
  the Company Restructuring Promotion Act (within seven days from the date receiving the
  decision notice from the court)
• Transaction details in case the transactions of the goods and services with affiliated companies
  account for 5% and more of the company’s sales in the fiscal year (By April 7)

Activity supporting the affiliate person or another company by offering excessive economic profit
through offering or transacting funds, such as provisional payment and loans, to the affiliate person
or another company with quite unreasonably low or high compensation, or by providing or transac-
ting in quite huge amount.

• Is it an activity to lend money at lower rate than borrowings interest rate from the financial inst-
  itution of an affiliated company?
• Is it an activity to offer advanced payment with no-interest bearing or at low interest rate, irrele-
  vant of goods and services trade?
• Is it an activity to support an affiliated company by delaying the account receivable or by making
  it uncollectible account?
• Is it an activity not collecting accounts receivable and service fees or not receiving delay interest,
  arising from delayed collection?
• Is it an activity depositing collective severance insurance in a financial institution and lending
  money to an affiliated company at low interest rate?
• Is it an activity not collecting or neglecting dividend of the shares of a supported company?
• Is it an activity irregularly supporting key money and interim payment by signing a long-term sa-
  les contract for a contracted company-owned real estate, by paying the key money and interim
  payment, and then by cancelling the contract before paying the remaining balance?
• Is it an activity additionally paying deposit for lease or rent, while using an affiliated company-
  owned building and facilities, despite paying the same use fee as an independent person with
  special relationship?
• Is it an activity not receiving delay interest or receiving smaller delay interest, arising from the
  delay of rent payment from the agreed payment date?

An activity supporting an affiliate person or another company by offering excessive economic
profit through offering or trading with quite low or high compensation for the manpower to the
affiliated person or another company, or by offering or trading manpower in quite huge amount.

• Is it an activity burdened by the company in terms of labor cost, after offering manpower to an
  affiliated company for business support?
• Is it an activity not collecting labor cost like allowance for retirement fully or partially, as a contr-
  act to send manpower is signed and the manpower is offered?

An activity supporting an affiliate person by offering excessive economic profit through offering
real estate, marketable securities and intangible property rights at quite low or high compensa-
tion or offering or trading in quite huge amount.

• Is it an activity negotiating a bill issued by an affiliated company at lower discount rate than the
  discount rate negotiated by a non-affiliated company?
• Is it an activity buying commercial paper at lower discount rate than the discount rate according
  to the credit rating of the affiliated company?
• Is it an activity an affiliate person’s acquiring CB issued with high conversion price to the extent
  conversion right exercise is impossible, and with quite low interest rate?
• Is it an activity letting the financial institution acquire commercial paper or privately offered bo-
  nd issued by the affiliate person of the truster, after the company’s subscribing to specific mon-
  ey trust of the financial institution and then letting the financial institution use the money?
• Is it an activity through which an affiliate person acquires shares issued at high price to the ext-
  ent that people without special relationship will not acquire, as an affiliated company conducts
  paid-in capital increase in the mode of allotment to the third party?
• Is it an activity through which an affiliate takes over forfeited shares issued upon paid-in capital
  increase by an affiliated company at high price or takes over through a financial institution?
• Is it an activity that an affiliate person takes part in underwriting the shares or underwriting sta-
  ke quite beyond existing stake, despite the issue price of the shares through paid-in capital incr-
  ease being quite high in view of share price trend?
• Is it an activity buying the shares issued by an affiliated company through offshore fund at high
  price or buying commercial paper at low rate?
• Is it an activity an affiliate person underwrites subordinated bond issued at low interest rate to
  the extent that an independent person will not underwrite?
• Is it an activity selling or renting real estate at lower price than the market price to an affiliated
  company or buy or rent real estate from an affiliated company at higher price than the market
  price?
• Is it an activity transferring the R&D outcomes to an affiliated company that will apply for a pate-
  nt?
• Is it an activity exercising conversion right, although the accumulated interest given up, due to
  exercise of the conversion right without special reason like defense of managerial right, is bigger than the difference between total market value of the shares to be converted and total conversion value?
• Is it an activity selling BW to an affiliate person by issuing BW at quite lower price than the market price?

A document containing certain matters shall be issued to the subcontractor in advance, unless
there is justifiable reason in the case of commissioning manufacture.

• Are there some omissions from the legal entry including commissioning date, object, details, delivery
  date and place?
• Is a document (including e-document) issued after commissioning manufacture?
• Is the order objectively proved, although an order was placed electronically?
• Is the additional agreement is issued or are the work instructions issued, although additional constr-
  uction scope is classified and the amount is quite huge?

The general contractor shall preserve certain documents on subcontracting transactions.

• Aren’t the relevant documents (goods count, goods return, decision on subcontract cost) destroy-
  ed, after they are drawn up before the subcontract cost is paid at the time when the subcontract
  cost payment is completed?
• Isn’t the original copy of the agreement destroyed after entering the details of the agreement on
  the computer?
• Aren’t the relevant documents destroyed within three years from the closing of subcontracting
  transaction?

The general contractor shall pay the advancement payment to the subcontractor within 15 days
from the date receiving the advanced payment from the client, according to the details and ratio
of the advanced payment. If the advanced payment is paid, after legal payment date, the delay
interest shall be paid for the delayed period. If the advanced payment is paid in bill, the bill dis-
count fee shall be paid for the exceeded period, if the bill expiration date exceeds the legal pay-
ment date.

• Hasn’t the general contractor paid advanced payment to the subcontractor, despite receiving it
  from the client?
• Did the general contractor pay in smaller ratio than the received ratio although the general contractor received advanced payment?
• Didn’t the general contractor pay bill discount fee, although the general contractor paid the adv-
  anced payment with a bill and the bill’s expiration date exceeded legal payment date?
• Didn’t the general contractor pay delay interest or bill discount fee from the exceeded date to the actual payment date although advanced payment was paid in cash or bill, after legal payment date?

Except for legitimate reasons, the general contractor shall notify the subcontractor of the insp-
ection result within 10 days from the receiving date of the object from the subcontractor. If no
notice is made within the period, pass from the inspection is deemed.

• Is it an activity to reject receiving the object or to delay the payment of subcontract cost?
• Did the general contractor made the object fail by unilaterally-set inspection standard without
  agreeing with the subcontractor?
• Is it an activity making the object fail, although the object could pass, due to very strict inspection
  standard, compared to the usually applied inspection standard?
• Is it an activity to excessively hold the payment through forecasting defect occurrence?

The subcontract cost shall be paid until the payment date set with short period of within 60
days from the receiving date of the object (the date set, if tax invoice issue date is set once or
more times monthly, due to frequent delivery).

• Is it an activity not paying bill discount fee or delay interest, as the general contractor pays sub-
  contract cost after the legal payment date?
• Is it an activity paying subcontract cost less than the cash ratio received from the client?
• Is it an activity paying subcontract cost in bill after the bill settlement payment period received
  from the client?
• Is it an activity regarding inspection ending date as the object receiving date?
• Did it set the end of the month concerned as the object receiving date under the name of operating a closing system, although the general contractor received the object delivery once or twice monthly?

If the general contractor receives additional money from the client, due to change order or eco-
nomic condition change, and when additional expenses are needed for the completion of the
object, because of the same reason, the subcontract cost shall be increased, according to the
additional money’s detail and ratio. If money reduction occurs, the reduction is possible, accor-
ding to the details and ratio (adjustment within 30 days from the adjusted date, and paying wit-
hin the paid date).

Is it an activity through which the general contractor does not pay or pays less than the ratio or
details than the received to the subcontractor, although the general contractor received the cha-
nge order or price level-linked amount?

Decision of subcontract cost at lower level than usually paid on the same type or similar one as
the object using an unfair method shall not be made or coercion shall not be made to receive it.

• Is it an activity deciding subcontract cost by uniformly decreasing unit price without objectively
  valid reasons, such as materials (including raw/auxiliary materials) and labor cost reduction?
• Is it an activity letting the subcontractor estimate based on large quantity order, but deciding
  subcontract cost based on the large quantity order estimate, despite placing a small quantity
  order?
• Is it an activity deciding subcontract cost lower than usually paid compensation, due to export,
  discount sale, and sample?
• Is it an activity deciding subcontract cost lower, due to construction within the execution budget
  by setting the budget lower than the original contract amount?
• Is it an activity deciding subcontract cost at lower level than the bid amount in the competitive
  bid?
• Is it an activity deciding subcontract cost, quite lower than direct construction cost specified on
  the original contract statement without justifiable reason using a private contract mode?

The general contractor shall not coerce the subcontractor to buy goods and equipment design-
ated by the general contractor except the cases for commissioned objects’ quality maintaining,
improvement or with other justifiable reasons.

• Is it an activity through which general contractor lets the subcontractor buy or use the goods
  and equipment coerced or designated by the general contractor in terms of the materials used
  by the subcontractor unjustly against the intention of the subcontractor?
• Is it an activity coercing high price component purchase to the subcontractor, insisting the com-
  ponent was designated by the client, after commissioning manufacture without mentioning such
  a thing upon contracting?
• Is it a case coercing an activity admitted disadvantageous to the subcontractor including the ap-
  pointment of material supplier in relation with manufacture commissioning?

In case the general contractor lets buy its goods or equipment necessary for manufacturing of
the objects, the general ontractor shall not let the subcontractor pay the relevant cost before
payment date of the subcontract cost without justifiable reasons, or let the subcontractor pay
in remarkably unfavorable conditions than used or supplied by the general contractor.

• Is it an activity letting the subcontractor buy materials necessary for the manufacture of the co-
  mmissioned object from the general contractor, and letting the latter pay the cost even before
  delivery of the commissioned object?
• Is it an activity deducting amount more than actually injected quantity upon paying subcontract
  cost on the delivery portion of the commissioned object, after letting the subcontractor buy goo-
  ds or equipment necessary from the general contractor in continuous subcontracting transacti-
  ons?

Unjust reduction of subcontract cost shall not be made, when manufacture is commissioned,
despite no reason to attribute to the subcontractor.

• Is it an activity increasing delivered quantity, leaving the total subcontracting cost the same?
• Is it an activity paying only original subcontract cost on the ground that additional amount is mi-
  nimal, despite additional commission of manufacture, after the subcontracting?
• In the case of general contractor’s supplying materials and equipment, is it an activity reducing
  subcontract cost, due to no delivery within the set period, while the general contractor delays the
  necessary materials and equipment or sets unfair delivery date?
• Is it an activity transferring foreign exchange loss differently from the original contract terms
  and conditions to the subcontractor in subcontracting transaction of export?
• Is it an activity reducing subcontract cost, due to unreasonable reason like deficit in business or
  sales price decline?
• Is it an activity burdening the subcontractor employment insurance premium and occupational
  health and safety management cost that need to be paid by the general contractor, according to
  the relevant laws and regulations?

The general contractor shall not intervene in the subcontractor’s management using a method
to control subcontracting transaction quantity.

• Is it an activity letting gain general contractors’ instruction or approval or letting the subcontrac-
  tor employ a specific person against the latter’s intention in appointment of the subcontractor’s
  employee?
• Is it an activity limiting subcontractor’s production items or facility size?
• Is it an activity limiting the details of re-subcontracting transaction, such as the selection of a
  secondary subcontractor and setting contract terms and conditions without consideration of the
  subcontracting transaction purpose including object’s quality maintaining or compliance with
  delivery date by intervening in the subcontractor’s re-subcontracting transaction?

The general contractor shall not undertake an action limiting order winning opportunity, suspe-
nding business and other disadvantages to the subcontractor, due to subcontractor’s reporting
general contractors’ violation of the Subcontracting Act to a relevant agency.

• Is it an activity giving disadvantages by cancelling partner firm registration on the partership, or
  lowering partner firm’s credit rating from A to B, due to the subcontractor’s reporting to The FTC?
• Is it an activity limiting order winning opportunity or severing trading, although the subcontract-
  or’s price, quality and delivery date are not inferior, because the subcontractor submitted a peti-
  tion against the general contractor to the FTC?